Trump pins hopes on tax cut ‘Christmas present’

Middle-class families wooed with pledge of saving $1,182 a year while wealthiest ‘will benefit too’

REPUBLICAN leaders launched their plan for the largest tax overhaul since Ronald Reagan’s presidency in the Eighties, promising a $1,182 (£905) cut for average families, and slashing corporation tax in a bid to boost the US economy. It represented a concerted attempt to achieve a first major legislative goal under the presidency of Donald Trump after failing to repeal Obamacare, the signature domestic policy legacy of Barack Obama.

Mr Trump and Republicans in Congress had been hoping to achieve three major “wins” – Obamacare repeal, major infrastructure investment and tax reform – in his first year in the White House, but tax reform is now the only one with a chance of being secured. In line with campaign pledges made by Mr Trump, the Tax Cuts and Jobs Act proposed reducing tax paid by companies from 35 per cent to 20 per cent.

It would also create a new 10 per cent tax on US companies’ high-profit foreign subsidiaries, discouraging them from moving profits abroad.

An average middle-class family of four with a $60,000 (£46,000) income would receive an estimated tax cut of $1,182, about enough to fill up their car with petrol for a year or pay their phone bill, Republican leaders promised. Mr Trump said tax cuts were “the rocket fuel our economy needs to soar higher than ever before” and it was a “great day for the American worker”.

He said: “I believe we’ll have it done before Christmas. It will be the biggest cut in the history of our country and create tremendous prosperity.”

Mr Trump also announced that Broadcom, a $100 billion semiconductor company based in Singapore, was legally relocating its home address to the US, bringing $20 billion in annual revenue back. Independent analysts have said that companies and the wealthiest Americans would benefit the most from the tax reform bill.

While reducing the number of income tax bands from seven to four, the bill does keep the top rate for wealthy taxpayers at 39.6 per cent, but it doubles the threshold at which that is paid to $1 million.

The estate tax would also be eliminated after six years, benefiting wealthy families like Mr Trump’s. Democrats criticised the proposals as a giveaway to corporations.